Report questions financial benefits of 2016 Olympics

September 23, 2009

The Chicago 2016 Olympic bid team's assertion that a Summer Games would pump $13.7 billion into the city's economy will be challenged Thursday when an independent analysis says new spending is likely to be about one-third that amount.

Anderson Economic Group LLC projects the Olympics would trigger only $4.4 billion in additional tourism and infrastructure spending in Chicago and Cook County, and said even this figure could turn out to be too high.

"If private financing for infrastructure is not realized, and donations and ticket sales revenues fall short of targets, our estimated economic impact would be reduced as taxpayers see the benefits offset by higher taxes," the report stated.

The East Lansing, Mich.-based company, which has a Chicago office, took on the analysis at the suggestion of Steve Frayne, who runs a Web site called "A Balanced Discussion" at www.Chicago2016.com. He acquired the domain name in 2004 and is in a legal battle over it with the Chicago 2016 bid organization.

While the study will be posted on Frayne's site, Anderson said it conducted the work on its own dime and has no direct relationship with Frayne.

In its analysis, the firm used official bid data, but adjusted some downward. For example, it estimated only the numbers of visitors above what Chicago normally would get in summer, adjusted revenue estimates to reflect only money coming from out of town, and tweaked expenditures to reflect only what would be spent locally.

It also built in an assumed cost of $500 million, the amount of the city guarantee, in case the private financing for the athlete's village construction didn't pan out or sponsorships didn't come through as planned. The Chicago 2016 bid team has said it is extremely unlikely the city guarantee would have to be tapped.

Chicago 2016 said Wednesday that it stands by its own report issued earlier this year, which projected an impact of $22.5 billion in the entire state and the equivalent of one year of work for 315,000 people.

"That study, like the one released today, reinforces the economic legacies that we've seen play out in past host cities," said bid spokesman Patrick Sandusky.

But one outside observer said the Anderson study hits closer to the mark.

"You want to look at the net effect and this group did a better job," said Allen Sanderson, a sports economist at the University of Chicago. "At the end of the day, the impact number is likely to be between zero and their number, as opposed to between their number and $22 billion.

"If we do things well, there will be a positive impact," he said. "If we do things poorly, zero is an optimistic outcome."